​Immutable conducts its second round of layoffs and cuts 11% of its employees

Australia’s largest crypto gaming start-up is making 11 per cent of its workforce redundant despite banking hundreds of millions of dollars in venture capital funding over the past two years.

Immutable, which received $280 million from investors in a funding round that valued the crypto gaming company at $3.5 billion in March last year, announced the lay-offs internally on Wednesday morning.

In a note to staff from chief executive and co-founder James Ferguson seen by The Sydney Morning Herald and The Age, the company blamed the lay-offs on a need to maximise how long its cash reserves will last and put its resources towards the most important projects.

“This is difficult news, and I am sorry to all Immutables impacted by these changes," Ferguson wrote. "As CEO, I am deeply aware that these role eliminations will directly impact the lives of many, and I take full ownership for these actions.”

Company figures lodged with the Australian Securities and Investments Commission for the past financial year help explain the job losses. The figures, which are lodged to comply with legal rules and do not necessarily paint a full picture of a company, show Immutable earned $27 million, but had $83 million of expenses, including about $45 million for employees, consultants and freelancers.

That would have represented a loss of about $56 million for the year, but Immutable marked up the value of its cryptocurrency and token holdings by half a billion dollars to $558 million. The value of such holdings, many associated with Immutable’s own games and projects, is unpredictable because crypto markets can swing wildly, especially if assets are sold in bulk.

An Immutable spokesman said the company was a “long-term holder” of its own tokens and had $280 million in cash on its balance sheet, giving it more than four years of cash reserves at its current rate of spending. The spokesman said the company had done a full assessment of its contractor budgets and reduced its hiring plans in recent months to focus on high-priority areas.

Immutable is the latest in a string of Australian start-ups to cut staff over the past 12 months, following others such as the rapid grocery delivery service Milkrun and social media tool Linktree, as investors become wary of making big bets on nascent companies.

The note to staff said Immutable was making a series of changes to its organisation, including outsourcing development on the traditional aspects of its games to partners, so it could focus on the crypto and Web3 components, reorganising some of its divisions and shifting spending to core areas.

The crypto industry overall has been battered over the last year as investors concerned about rising interest rates turn away from speculative investments after a series of unrelated high-profile collapses, including of the FTX exchange and the Terra/Luna cryptocurrency project.

Immutable, which was founded in 2018 and is headquartered in Sydney, had grown rapidly in recent years, offering generous pay packages that other start-up bosses privately complained it was hard to compete with.

On Wednesday, the company told staff that they would receive an email if they were likely affected by the cuts, with further briefings and one-on-one meetings to come. Affected employees have had their access to Immutable’s systems suspended.

Ferguson wrote that affected staff would be offered an average of 10 weeks’ redundancy pay, which is above statutory requirements; an ability to keep more shares in the company than required; laptops; and counselling, coaching and outplacement services. Staff in the US will also have their company-provided healthcare extended.

Ferguson did not back down from the company’s ambitious vision to dominate Web3 gaming - online games that use virtual assets such as cryptocurrency and non-fungible tokens (NFTs).

“We have unwavering conviction in the significant opportunity we are executing against, and we know there is still so much innovation and transformation yet to come for web3 gaming," he wrote.

One of the company’s investors and board observer, venture capitalist Zebediah Rice, endorsed the move. “The disciplined companies of today will be those best positioned to capture the next decade of value,” said Rice, a partner at King River Capital.

This material is taken from the website smh.com.au.